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"The rate of change is not going to slow down anytime soon.
If anything, competition in most industries will probably speed
up even more in the next few decades." – John Kotter
(author, Leading Change)

The retail sector is in the midst of considerable change.

E-commerce has proven to be a steady but relentless disruptor of
the status quo, forcing many retailers, as well as their
shareholders, to answer fundamental questions about the continued
viability of the traditional big box and department store.

Not all is lost, however, for retailers struggling to change in
this evolving marketplace. Despite all predictions to the
contrary, Best Buy appears to be on the verge
a turnaround, due, in significant part, to CEO Hubert Joly’s
efforts.

Instead of blindly rebranding and attacking an e-channel
strategy, Joly’s worked to shift the once-failing retailer’s
strategy and business model to leverage previously-perceived
weaknesses (such as physical locations and a poor web presence)
to adapt to today’s shifting marketplace.

Joly’s “renew blue” initiative has re-energized Best
Buy and stemmed that all-too-familiar tide of dropping revenue
and increasing costs, all while adjusting to the challenges of
implementing an the omni-channel marketing strategy at a $50
billion company that grew to that size largely by mastery of a
single channel.

By abandoning/closing the company’s oversized stores in favor of
smaller spaces featuring specialized, focused technology and
products, Best Buy is working to decrease costs through rent
receipts while increasing profitability through additional
“in-store” product sales augmenting the newly-specialized
offerings.

Furthermore, the electronics giant will soon be maximizing its
more than 1,000 locations by shipping merchandise from stores
directly to online customers, meaning these customers will have a
better chance of finding “in-stock” merchandise while the
retailer will in turn be increasing the speed through which
inventory turns through Best Buy’s physical locations. By
leveraging Best Buy’s impressive store network to support an
omni-channel approach, Joly has devised a strategy has
effectively turned an area of perceived weakness into an area of
strength.

Conclusion

The retail industry is going through some of the most significant
and rapid changes of the past century, with the traditionally
dominant players struggling to adapt to shifting consumer
demands, expectations, and business strategies.

And while Best Buy is hardly out of the woods, it is
headed on the right track. Best Buy illustrates the point
that one need not panic when confronted with
underperformance. Instead, by analyzing how best to
leverage current assets and product within a changing marketplace
and adapting strategy accordingly, businesses can return to
competitiveness.

Margaret Bogenrief is a partner with ACM Partners, a boutique
crisis management and distressed investing firm
serving companies and municipalities in financial
distress. She can be reached at margaret@acm-partners.com.